Got an email today from an individual who is a member of an LLC with two members and no operating agreement. The LLC operates a bar / restaurant and the other member died suddenly. Guess what? Without an operating agreement, the deceased member's LLC interest goes into his estate and, most likely, the spouse of the deceased member ends up as your new partner. Not all written operating agreements deal with the death or withdrawal of a member. They are somewhat complicated for one unsophisticated in business to plan for but, should the worst come to pass, you end up so much farther ahead and avoid mucho aggravation if the situation is properly planned for on the front end. The LLC operating agreement should contain a buy-sell agreement covering the death of a member.
Article VII of this sample operating agreement contains a buy-sell agreement with transfer restrictions. Section 7.3 specifically deals with the death of a member.